[Quote No.34698] Need Area: Money > Invest "--What's the difference between a thief and a counterfeiter? A thief takes what is not his without another's consent. A counterfeiter passes off as genuine that which he knows to be a fraud. Or, in simpler terms, one is a politician and the other is a central banker.
--Maybe your best short-term strategy at the moment is to ride the counterfeiter's put. If the Federal Reserve, the Bank of Japan, The European Central Bank, and the Bank of England are all going to create money to buy assets and 'reflate' the economies they are in charge of respectively, that new money is going to leak somewhere. It could be stocks.
--Mind you, this makes stocks a total speculator's play at this point. Excess credit distorts values by elevating prices (price and value, of course, are not the same thing). There is no hope for a diligent investor in this environment. His best bet is to stay on the sidelines and wait for the liquidity to slosh its way around. Maybe this is why Greg Canavan at Sound Money. Sound Investments took the week off. He's a value pilgrim in an unholy land.
--Alan Kohler over at 'Business Spectator' contributed an extremely useful insight to the 'currency war' metaphor that is now all the rage. Earlier this week he pointed out that low interest rates, easy monetary policy and fiscal stimulus are all ways for a government to steal demand from the future to make present growth look better. A whole lot of global theft took place since late 2008.
--But with household deleveraging taking grip somewhere in the part of the Western brain that produces a profound, emotional sense of fear, it's been hard for governments to encourage their peoples to spend monies they don't have and don't want to borrow. We have reached the next stage of the strategy.
--If the first stage was 'beggar the future' with borrowing and spending, the next stage is 'beggar thy neighbour' by stealing his demand. Kohler points out that when you can't steal any more future demand from your economy; you have to steal future demand from someone else's economy. The most direct route to that kind of theft is to manipulate the hell out of your currency so your exports are always cheaper to your neighbour and he keeps buying what you're selling.
--The long-term consequences of this policy are mixed. On the one hand, the export driven model that relies on competitive currency devaluation has left the world awash in surplus productive capacity and cheap goods (with a hat tip to slave wages in some parts of the emerging markets). More stuff. Cheaper stuff. Good, no?
--It is, if you like stuff. It is not, if you like work. Now a lot of people don't like work. But other than inheriting money from your rich father, it remains the best way to pay the bills ever invented. It also, if you want to be philosophical, is one of the activities that gives our lives meaning, purpose, a sense of fulfilment, and tangible accomplishment. Work is how we make the world better, richer, or at least busier.
--Competitive currency devaluations steal work from one country and give it to another. That makes them unpopular in the countries where jobs begin disappearing. This is why currency wars quickly become political hot potatoes. Out of work citizens are angry voters. And angry voters want somebody to do something about the problems.
--That is where we are now. And that is why gold - which is nature's currency and can't be printed by anyone and is relatively scarce in the earth's crust - is going up against all that paper money serving a devious master. But as the Aussie dollar reaches parity, something must give.
--That is, if now resembles the past few years, this latest move down by the dollar and up by the commodities would be reversed. Gold, copper, silver, tin, oil and the rest would fall as the dollar corrects. Corrects to what, though? Can you think of a good reason why the U.S. dollar should get stronger from here?
--We can't either - unless it's just the simple observation that everyone is agin' it and no one is for it. If everyone is a dollar bear, is it a good trade to be a dollar bull? Or is this the long-awaited moment where the dollar begins to circle the hyper-inflationary drain?
--It's a moment we've been talking about for years. Does the simultaneous rise of all asset classes against the greenback indicate that the moment is finally here? And if it is....what should you be doing, or have already done?" - Dan Denning'The Daily Reckoning', Thursday, 7 October 2010.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34701] Need Area: Money > Invest "An almost hysterical antagonism towards the gold standard is one issue which unites [the people who believe in a big government and a massive welfare state - or in other words] statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation [created as a result from big government's reckless spending and loose monetary policy]. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in the 1930's Great Depression]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard." - Alan GreenspanEconomist and eventually Chairman of the US Federal Reserve. Quote from his essay 'Gold and Economic Freedom', published in 'The Objectivist', 1966. As Federal Reserve Chairman he did not follow his own advice and the Great Financial Crash of 2007-9, second only to the Great Depression' occurred as a result.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34704] Need Area: Money > Invest "[In a floating rate system] The rising currency is a positive in terms of putting dampening inflation pressure on the economy where inflation has been expected to pick up to the top of the Reserve Bank of Australia's target band of 3.0 percent over the coming year. The rise in the currency is a tightening of financial conditions and therefore it does some of the policy work for the RBA [meaning they don't have to raise interest rates as far or as fast but it does make things difficult for exporters and domestic tourism - although foreign tourism becomes better value]." - George TharenouUBS economist, 10th October, 2010. Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34713] Need Area: Money > Invest "The name of the game in terms of planning [and investing] during periods of high inflation [and other financial crises], is guessing what ways the government is going to try and correct their bad choices. [For example massive welfare and work programs through deficit spending, even quantitative easing or 'money printing' that causes the currency to fall and inflation to rise and controlling public perceptions and anger to justify affixing blame on political scapegoats which are then handled through regulations and laws that then often have unintended consequences, causing other problems that then 'require' still more government intervention, etc]." - Dr. Gerald SwansonEconomist and author of 'The Hyperinflation Survival Guide: Strategies for American Businesses'.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34716] Need Area: Money > Invest "Milton Friedman's 'impossible trinity'...the fact that a government can control its monetary policy, its capital movements or its exchange rates... but it can rarely control all three for long periods of time. From 1997 through 2005, China, whose capital account was much more closed then, simultaneously controlled its exchange rate (at a fixed rate), interest rates (at a fixed rate) and money supply/inflation. But starting in 2005, inflationary pressures built up and the government was forced to allow the exchange rate and interest rates to rise, as well as to increasingly liberalize outward capital flows to take pressure off the internal build-up of liquidity. Clearly, we are now back in a similar environment with the PBoC raising reserve requirements and the RMB making a fresh high yesterday. As the extreme deflationary shock of late 2008 fades away, China will have to confront important policy choices: it will have to pick either a higher RMB (and a lower current account surplus), higher interest rates or higher inflation. Politically, the first option would be the savviest." - Julien GuillaumeFinancial analyst with GaveKal, published in FNArena News, October 13 2010.
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[Quote No.34728] Need Area: Money > Invest "Currency and Trade Wars Feed on Stagnation...Only the Weak Survive: The risk of global currency and trade wars is rising, with most economies now engaged in competitive devaluations [ie Australia's dollar just rose from the low 90 cents to the US Dollar to parity in a matter of a fortnight when Federal Reserve Chairman Ben Bernanke they are considering still more quantitative easing or 'money printing'. Australian mineral commodities and mineral company shares jumped some as much as 10% in a few days]. All are playing a game that some must lose [for example domestic tourism and Australian exporters of manufactured goods].
Today’s tensions are rooted in paralysis on global rebalancing. Over-spending countries – such as the United States and other 'Anglo-Saxon' economies – that were over-leveraged and running current-account deficits now must save more and spend less on domestic demand. To maintain growth, they need a nominal and real depreciation of their currency to reduce their trade deficits [where their countries import more than they export so money flowsw out of their country]. But over-saving countries – such as China, Japan, and Germany – that were running current-account surpluses [ie that export more than they import] are resisting their currencies’ nominal appreciation [which makes their goods more expensive in other countries' currencies and therefore less competitive so they sell less]. A higher exchange rate would reduce their current-account surpluses, because they are unable or unwilling to reduce their savings and sustain growth through higher spending on domestic consumption.
Within the eurozone, this problem is exacerbated by the fact that Germany, with its large surpluses, can live with a stronger euro, whereas the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) cannot. On the contrary, with their large external deficits, the PIIGS need a sharp depreciation to restore growth as they implement painful fiscal and other structural reforms.
A world where over-spending countries need to reduce domestic demand and boost net exports, while over-saving countries are unwilling to reduce their reliance on export-led growth, is a world where currency tensions must inevitably come to a boil. Aside from the eurozone, the US, Japan, and the United Kingdom all need a weaker currency. Even Switzerland is intervening to weaken the franc.
Meanwhile, China is intervening massively to resist appreciation of the renminbi and thus maintain its export performance [even though a higher renmimbi would mean imported goods, including raw materials, would be cheaper. China is aware that it needs more of a balanced economy and therefore more domestic demand and consumption to utilise its manufacturing capacity which is presently aimed at producing goods for export to international markets]. As a result, most emerging-market economies are now similarly worried about currency appreciation, lest they lose competitiveness relative to China, and are intervening aggressively and/or imposing capital controls to stem upward exchange-rate pressure.
The trouble, of course, is that not all currencies can be weak at the same time: if one is weaker, another must, by definition, be stronger. Likewise, not all economies can improve net exports at the same time: the global total is, by definition, equal to zero. So the competitive devaluation war in which we find ourselves is a zero-sum game: one country’s gain is some other country’s loss. [This kind of problem where countries 'beggared their neighbours' with currency depreciation and trade barriers made the Great Depression much worse as then much export and the jobs and money it creates dwindles].
The first salvos in this war came in the form foreign-exchange intervention. To diversify away from US dollar assets while maintaining its effective dollar peg, China started to buy Japanese yen and South Korean won, hurting their competitiveness. So the Japanese started to intervene to weaken the yen.
This intervention upset the EU, as it has put upward pressure on the euro at a time when the European Central Bank has placed interest rates on hold while the Bank of Japan (BoJ) and the US Federal Reserve are easing monetary policy further. The euro’s rise will soon cause massive pain to the PIIGS, whose recessions will deepen, causing their sovereign risk to rise. The Europeans have thus already started verbal currency intervention and may soon be forced to make it formal.
In the US, influential voices are proposing that the authorities respond to China’s massive accumulation of dollar reserves by selling an equivalent amount of dollars and buying an equivalent amount of renminbi. [There is also talk of naming China as a currency manipulator which would allow many countries to set tarriffs and quotas on Chinese goods in retaliation]. Meanwhile, China and most emerging markets are accelerating their currency interventions to prevent more appreciation.
The next stage of these wars is more quantitative easing, or QE2. The BoJ has already announced it, the Bank of England (BoE) is likely to do so soon, and the Fed will certainly announce it at its November meeting. In principle, there is little difference between monetary easing – lower policy rates or more QE – that leads to currency weakening and direct intervention in currency markets to achieve the same goal. In fact, quantitative easing is a more effective tool to weaken a currency, as foreign exchange intervention is usually sterilized.
Expectations of aggressive QE by the Fed have already weakened the dollar and raised serious concerns in Europe, emerging markets, and Japan. Indeed, though the US pretends not to intervene to weaken the dollar, it is actively doing precisely that via more QE.
The BoJ and the BoE are following suit, putting even more pressure on the eurozone, where a stubborn ECB would rather kill any chance of recovery for the PIIGS than do more QE, ostensibly owing to fears of a rise in inflation. But that is a phantom risk, because it is the risk of deflation, not inflation, that haunts the PIIGS.
Currency wars eventually lead to trade wars, as the recent US congressional threat against China shows. With US unemployment and Chinese growth both at almost 10%, the only mystery is that the drums of trade war are not louder than they are.
If China, emerging markets, and other surplus countries prevent nominal currency appreciation via intervention – and prevent real appreciation via sterilization of such intervention – the only way deficit countries can achieve real depreciation is via deflation. That will lead to double-dip recession, even larger fiscal deficits, and runaway debt.
If nominal and real depreciation (appreciation) of the deficit (surplus) countries fails to occur, the deficit countries’ falling domestic demand and the surplus countries’ failure to reduce savings and increase consumption will lead to a global shortfall in aggregate demand in the face of a capacity glut. This will fuel more global deflation and private and public debt [sovereign] defaults in debtor countries, which will ultimately undermine creditor countries’ growth and wealth." - Nouriel RoubiniEconomist. Published on the web Friday, October 15, 2010.
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[Quote No.34730] Need Area: Money > Invest "Technical investing, including charting, is investing based on market psychology which takes into account those buying and selling due to business fundamentals, the so-called 'value' investors, as well as those less well informed herd-following and emotion-driven speculators, in relation to the demand-supply balance of stocks at the time. It is not about owning a share of a business but rather surfing the wave of fickle public opinion and, if understood as such, is more akin to gambling and requires a sophisticated understanding of market behaviour, probabilities, money management and risk minimisation techniques. Both investing styles require expertise, effort and time to be consistently successful." - Seymour@imagi-natives.comAuthor's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34744] Need Area: Money > Invest "It's important to remember that most traders - or the good investors who know when they are investing and when they are trading - are basically amoral and market neutral with their trading portfolios. They are seeking to exploit short term technical [psychological] trends in the market for profit. That is all...We'd venture to say that what things should be worth or ARE worth (or whether they are really worth anything at all, intrinsically) is probably not a question a trader would bother with (or so we imagine)." - Dan DenningEditor of the Australian 'Daily Reckoning' financial newsletter.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34745] Need Area: Money > Invest "If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset. The particular asset varied from one boom to another. But the basic underlying propagator was too-easy monetary policy and too-low interest rates ..... [and therefore the importance of a formula like the Taylor Rule to set cash interest rates rather than discretion which is too easily abused for political purposes, to the long-term detriment of the economy and society at large]." - Anna SchwartzCo-author with Milton Friedman of 'A Monetary History of the United States', published 1963. Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34890] Need Area: Money > Invest "Here’s A Few Shocking Facts Your Stockbroker &
Financial Planner Will Never Admit
While they might pose as your trusted advisors, they’re not telling you the truth about their underlying motives: to earn commissions. They are not offering you independent advice, either. Let’s take a deeper look...
THE TRUTH ABOUT STOCKBROKERS: Stockbrokers are paid to move stocks (& get paid on a transaction basis) not to give you objective advice. The reality is income in the brokerage business is generated as a result of how many trades a broker can get you to make each year, not on the results they achieve for you as a client.
That’s right: a stockbroker would make more money by getting you to make a dozen losing trades than they would if they put you onto the next Microsoft which allowed you to multiply your wealth hundreds of times over.
It’s a sad system: Most brokers have very little background in security analysis, and are often simply salespeople. In fact, the brokers who generate the most commissions are treated like royalty – often rewarded with free trips, massive bonuses, Rolex watches, etc. Unfortunately, none of the major brokerage houses offer such rewards for brokers who make their clients money.
THE TRUTH ABOUT FINANCIAL PLANNERS: Financial planners are in exactly the same boat – with around 85% being paid an ongoing fee from fund managers to induce them to recommend their products. And once again, the fund manager makes their money based on the amount of funds under management, not on the returns they generate for their client.
Obviously, this means their motivation is to get more clients and funds under management. Not to work as hard as they possibly can to get you the best possible return on investment.
So what’s the solution? You must find a totally objective, accurate and independent source of financial counsel.
But don’t expect to find this sort of advice from the FINANCIAL MAGAZINES you read because the reality is they make most of their money from advertising, not subscriptions. As a result, do you really think they are going to tell you the truth if the truth will offend their big advertisers?
Of course not.
" - Nick RadgeProfessional trader for more than 24 years, a one time hedge fund manager and ex-associate director of the Australian investment bank, Macquarie Bank.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34930] Need Area: Money > Invest "I posted an article on Friday, stating that the stock market still had a bullish bias, but that breadth was deteriorating [- it is the Xmas break time so volume could naturally be low as it was last year]. Breadth indicators are also useful tools to assess the inner workings of the market’s rallies or corrections, and are used to identify strength or weakness behind market moves such as the nascent rally, i.e. to assess how the bulls and the bears are exerting themselves.
Let’s consider a specific measure of stock market 'internals': The number of S&P 500 stocks trading above their respective 50-day moving averages has declined to 80% from 93% in October (see bottom panel of the chart below). In order to be bullish about the secondary trend, one would expect the majority of stocks to be above the 50-day line.
However, the fact that fewer stocks are now above their 50-day moving averages than in October means that a smaller number of stocks are participating in the rally. In the meantime, the S&P 500 has been scaling new highs for the move. This is known as a so-called bearish divergence – a phenomenon investors should be mindful of, especially given the overbullish sentiment levels, although it is not a stand-alone timing indicator.
" - Prieur du PlessisHe has 27 years' experience in professional investment research and portfolio management. Quote from 20th Dec, 2010 article.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image

[Quote No.34934] Need Area: Money > Invest "[The share market's average dividend yield can help show whether the market is cheap or expensive from the historical range of the yield.] What about the S&P 500 dividend yield, and this comes courtesy of an old pal from Merrill Lynch who is currently an investment advisor. Over the course of 2010, numerous analysts were saying that people must own stocks because the dividend yields will be more than that of the 10-year Treasury. But alas, here we are today with the S&P 500 dividend yield at 2% and the 10-year T-note yield at 3.3%.
From a historical standpoint, the yield on the S&P 500 is very low ― too low, in fact. This smacks of a market top and underscores the point that the market is too optimistic in the sense that investors are willing to forgo yield because they assume that they will get the return via the capital gain. In essence, dividend yields are supposed to be higher than the risk free yield in a fairly valued market because the higher yield is “supposed to” compensate the investor for taking on extra risk. The last time S&P yields were around this level was in the summer of 2000, and we know what happened shortly after that. When the S&P yield gets to its long-term average of 4.35%, maybe even a little higher, then stocks will likely be a long-term buy." - David RosenbergEconomist with Gluskin Sheff. From his enewsletter 'Breakfast with Dave', Dec 22nd, 2010.Author's Info on Wikipedia - Author on ebay - Author on Amazon - More Quotes by this AuthorStart Searching Amazon for GiftsSend as Free eCard with optional Google Image